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Thursday, March 6, 2014

Golden Rules for Saving Money on Construction

Whether you're doing a home renovation or building from scratch, it's nice to be able to cut back on expenses in any construction project. Construction can get expensive, and since it's not as easy to get a loan as it was before the housing bubble burst, chances are you're working on a tight budget.

There are three ways to save money on construction projects: Cutting back on up-front costs, avoiding expensive mistakes, and making the finished structure less expensive to inhabit. From hiring workers and sourcing materials to doing some of the work yourself, there are lots of tricks to stay within your budget without cutting too much out of your project.Go Over the Project Line by LineMost contractors will meet with you to go over the construction schedule and break down all of the costs. This is a great opportunity to save! When you go line by line through the budget, don't be shy about questioning anything that you don't understand. Your contractor may have assumed that you want crown molding in your renovated space, for example. If you don't care about crown molding, you can save hundreds of rupees just by taking it off of the quote.This is also your opportunity to decide which parts of the project, if any, you want to take on yourself and discuss anything you want to source for yourself. Going the do-it-yourself route means extra work for you, either on site or at the home improvement store, but it's worth the extra effort if it means the difference between being able to afford your project or having to cut things out that you really wanted. When you're taking on any part of a construction project, you need to communicate frequently with your contractors and make sure that you lay out your responsibilities clearly from the start. If the project ends up delayed because you didn't know you needed that bathroom vanity on site by a certain date, it can cost you money.Source Your Own MaterialsWhen it comes to items like fixtures, door knobs, and even cabinets, you can often find less expensive options on your own than through your contractor.Most contractors will work with you, if you want to source some of the materials yourself, just make sure you agree before the project gets started. For example, if you're building or renovating a kitchen, you might be able to find cheaper counter tops at home improvement stores than through your contractor. You can also look for reclaimed materials to use in your project. If there's a Habitat for Humanity ReStore near you, it's worth a trip to see what they have. You can often find gently used elements like shelves and fixtures there for a deep discount.Don't wait until the project has started to decide what you will and won't be sourcing on your own. Instead, sit down with your contractor before the project starts, and go through the budget line by line. You want to make sure you know when they will need each item on site, what the measurements need to be, and what the labor costs cover, if they are putting anything together for you. In the bathroom that we added, an IKEA sink base would have cost less to buy, but the labor to put it together made it more expensive than the one our contractors sourced.Shop, Shop AroundNever go with the first estimate. This may seem like a no-brainer, but when you're eager to get started on something like replacing your roof before the next big storm, it's tempting to just hire the first contractor you talk to. I've heard that three estimates is a good rule of thumb, but in my experience it takes more like five quotes to really give you an idea of the price range out there.That first quote ended up being almost double any of the others! Not only did talking to several contractors keep us from overpaying, but we were open with them about getting several quotes, and some offered to price match.Shopping around doesn't just go for hiring workers. You also want to get mortgage quotes from more than one bank. Shaving even part of a percentage point off of your loan can cut down on your new mortgage payment. There are also different renovation loans that you can look into, like the 203(k), a home equity line of credit, or just plain refinancing your existing mortgage. Shopping for a loan is no fun, but finding the right one can save you a lot of money!Go GreenThe cost of construction includes what it will cost you to occupy the finished space, so take efficiency into account. If you can save money each month on energy and water bills, you can see a return on the up-front investment for things like double pane glass windows or beefed up insulation.Efficiency goes beyond structural features. If you're redoing your kitchen, consider replacing your appliances with Energy Star and WaterSense models. In Georgia, for example, if you replace your old fridge and freezer from the early 90's with an Energy Star model, you can save more than Rs.6100 per year in energy costs [source: Energy Star]. Even simple eco-friendly choices like water-efficient fixtures in the kitchen and bathroom can help you reduce your utility bills and make that construction project work for you.If you're really serious about cutting your energy bills, you can also look into alternative energy options for your renovation, like a solar hot water heater, solar panels, or a home wind turbine. You don't have to power your entire home with alternative energy to see savings. Many homes combine solar or wind power with power from the grid as backup. If your alternative energy system does produce more power than your home uses, though, your utility company may buy that power back from you [source: Gangemi]. Imagine getting a check in the mail from your electric company instead of a bill!Consider PrefabPrefabricated homes have come a long way, baby! Whether you're thinking about new construction or building an addition to your home, prefab just might be the way to go, if you're looking to save a buck [source: Garskof]. Modern prefabricated homes can be well-built, energy-efficient, and sometimes downright stunning. Companies like Method Homes or Rocio Romero offer high-end prefabs that look great and can save you money over new construction.Depending on where you live, you might be able to build with reclaimed shipping containers. A large part of construction costs are for framing and enclosing the structure, and shipping containers essentially allow you to skip a lot of those steps. The trick with a shipping container project is to find a contractor who knows how to work with them and making sure your area's building codes allow you to use them.As with any contractor, you want to pick and choose if you decide to go prefab. Check resources like Modular Today or the Modular Home Rating Guide to see if the prefab company you're considering has a good reputation for quality. It's also a good idea to compare prefab prices with construction prices in your area. Depending on what you're looking to build and where you live, you may find that prefab is not the cheapest solutionStay OrganizedUnexpected hiccups can mean additional costs, so stay on top of your construction schedule. If you're sourcing any materials yourself, have them on-site when your contractor needs them.Make sure you know what areas of your house need to be clear of furniture and take care of that before workers arrive. It's not cost-effective to pay expensive workers to stand around while you clear dishes out of your kitchen so that they can cut a new window in the wall.For a larger renovation, you may have to stay in a hotel during certain parts of the process. Book that room well in advance to save money.Keep track of any special requests that you made. While we painted our addition ourselves, we did pay the contractors to prime the walls and paint the ceilings. The day that the painters arrived, I randomly asked to see the low VOC paint and primer that we'd requested and paid extra for. It turned out that there had been a mixup, and they had to head back to the store. If you have special requests like this, especially ones that cost more, don't let that money go down the drain!Staying organized also means keeping up with any paperwork and staying on top of your contractor, if necessary. If your contractor is responsible for pulling permits, make sure you know what's due and when, so you can check to see that everything is properly permitted. If your city slaps you with a stop work order, you can face costly delays in the project and possibly fines.Think SmallIn construction, more square footage equals more money, so think about your project's size and ask yourself how much space you really need. Of course, you want to balance this out by considering resale value, but if you can cut back a few square feet here and there, you can save quite a bit. Depending on where you live and what the construction market is like, home construction can cost between Rs.4880 and Rs.12200 per square foot [source: Braley]!Cutting back square footage doesn't have to mean living with tiny rooms in your new space. When we were talking to the architect about our home addition, we'd originally wanted the guest bedroom we were adding to be 12 x12 feet (3.6 x 3.6 meters). By cutting back to 10 x 10 feet (3 x 3 meters), we shaved more than Rs.2,44,000 off the price of our addition. The guest room is a bit smaller, but with the money we saved we were able to add a back deck to our home, which was totally out of our budget before we played with the room sizes a bit.Any time you add on to your home, your power and gas bills are going to increase. Remember that you'll be paying to heat and cool that extra space when the project is done. By opting for slightly smaller rooms you not only save on construction costs on the front end but reduce your cost of living on the back end.Build During the Off SeasonWe broke ground on our addition in late February, which means we were getting quotes and talking to contractors beginning in mid-December and through early January. One contractor flat out told us that by getting quotes now, he'd be able to get lower prices from his subcontractors, because winter is a slow time for the construction industry.Like many industries, the construction business has busy and slow times each year. You can save between 4 and 5 percent by starting your project when contractors tend to be slow — right after Christmas [source: Glave]. On a more seasonal project, like a roof, you can save as much as 10 percent by doing the work in the winter [source: Gordon].Not only can you save money, but you'll get better service from your contractors during the off season. Since contractors are less busy, they have more time to meet with you, answer your questions, and go through those budgets line by line to see where you can save some cash.Of course, there is a reason for those off seasons. We saved a lot of money on labor a few years ago by replacing some of our windows with energy-efficient ones in the middle of winter. The thing we didn't consider: Replacing those windows meant that for most of one day, our home was exposed to the elements. Make sure you're ready for some unexpected inconveniences that can come with off-season construction, like spending the day huddled next to a space heater for warmth.Know When to Save and When to SpendSometimes, saving a buck now will cost you in the future [source: Salant]. A builder who gives you a lower cost per square foot may seem like a bargain, but sometimes that can portend shoddy work [source: Salant]. When you're looking at quotes, it's usually best to go with a middle of the road estimate from someone who gets good reviews on sites like Kudzu and Yelp. You're not really saving money if you have to redo the work in just a few years.The same thing goes for sourcing materials. If you're redoing your kitchen, don't choose the cheapest appliances. Read reviews and choose efficient, quality appliances that will last longer and help reduce your energy and water bills. Opting for quality may cost more up-front, but how much did you really save if you have to replace or repair those kitchen cabinets every few years?Saving money is great, but home construction is an investment. When you're trying to cut back on costs, it's sometimes easy to forget about your home's resale value. Laminate may look good on paper, but springing for tile or hardwood flooring makes your home more salable down the road.Whether you're renovating a single room or considering some major home construction, the key to saving money is considering your costs at every step of the project.